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Etsy exhibited exceptional financial performance in the last year, and outperformed all its competitors. The marketplace benefits from strong brand image as it was a pioneer in its niche market, and still has plenty of room to grow in the near future.
For these reasons, we believe we should: BUY
Investment summary
BUY – SELL – WAIT
News
04
Table of Contents
Top Management
02Market
Analysis
03
Fundamental Analysis
05ChartAnalysis
06Consensus Analysis
07
Company’soverview
01
Risks & Opportunities
08
What does the company do ?Founded in 2005 and headquartered in Brooklyn, New York,
Etsy operates an e-commerce marketplace specialized in handmade
products, from clothing to jewelry, toys, home design crafts. The
company provides various seller services, including Etsy Payments, a
payment processing service; Etsy Ads, an advertising platform; and
Etsy Shipping Labels. In addition, the company offers various seller
tools, including Shop Manager dashboard, a centralized hub for Etsy
sellers to track orders, manage inventory, view metrics and statistics,
and have conversations with their customers; Targeted Offers, a
sales, promotion, and media tool; educational resources, such as
blog posts and video tutorials for sellers; Etsy Seller Handbook; and
Etsy Teams, a platform to build personal relationships with other
Etsy sellers.
Where the company is doing business
N. America Europe
Australia
550
268
422
181
317
123
0 100 200 300 400 500 600
USA
International
ETSY revenue by geography (M $)
2017 2018 2019
Strategy Etsy Impact Strategy and Progress:
Etsy mission since its creation is to “keep commerce human”, automation andcommoditization are parts of modern life, however human creativity cannot beautomated, and human connection cannot be commoditized.
Focus on the Etsy marketplace in our six core geographies:
Etsy focuses on their six core markets (United States, United Kingdom, Canada,Germany, Australia and France), and will continue to evaluate additional geographiesin which to make strategic investments (India).These six locations represent the largest concentrations of Etsy buyers and sellersand, consequently, where they believe they have the most significant opportunitiesfor growth.
Build a sustainable competitive advantage:
Etsy is willing to build a sustainable competitive advantage around 4 keys elements :- Best-in-class search and discovery- Human connections- A trusted brand- A collection of unique items
Strenghts Weaknesses Opportunities Threats
• Year over year increase in Global retail e-commerce
• The opportunity to diversify and expand their line of products
• Important marketing expenses to develop global products
• The retention of Etsy’s sellers
• Solid domestic and international growth by the measure of gross merchandise sales (GMS)
• Diverse community• Etsy's platform
• Reliance on gross merchandise sales in the United States
• Dependent on $
Board
President and Chief Executive
Officer
Chief Financial Officer
Josh Silverman
Chief Technology
Officer
Mike Fisher
Rachel Glaser
Stockholders
7% 7%5%
4%
77%
% Ownership
Blackrock
The Vanguard Group, Inc.
State Street Global Advisors, Inc.
The Baupost Group, LLC
Others
Analysis of the marketMarket cap of leading online marketplaces worldwide as of September 2020 (in million U.S. dollars)
Leading online marketplaces worldwide 2020, by market cap
Note(s): Worldwide; September 30, 2020
Further information regarding this statistic can be found on page 8.Source(s): GP Bullhound; S&P Capital IQ; ID 1039552
0 10 000 20 000 30 000 40 000 50 000 60 000 70 000
Uber (United States)
Mercado Libre (Argentina)
Delivery Hero (Germany)
Takeaway.com (Netherlands)
Carvana (United States)
Etsy (United States)
Lyft (United States)
GrubHub (United States)
Kakaku.com (Japan)
CarGurus (United States)
Moneysupermarket.com (United Kingdom)
Gruppo MutuiOnline (Italy)
Redbubble (Australia)
TrueCar (United States)
Market cap in million U.S. dollars
2
Analysis of the marketMost popular online marketplaces according to online sellers in the United States as of January 2020 (index rating)Preferred online marketplaces of U.S. sellers 2020
Note(s): United States; January 2020; among EcommerceBytes users; wider industry metrics may vary
Further information regarding this statistic can be found on page 8.Source(s): EcommerceBytes; ID 448892
6,53
6,48
6,2
5,99
5,79
5,67
5,02
4,86
4,82
4,69
0 1 2 3 4 5 6 7
eBay
Bonanza
Ruby Lane
Mercari
Etsy
Poshmark
Amazon
Craigslist
eCrater
Rating on a scale of 1-10
2
Analysis of the marketLeading online marketplace websites in the United States as of 4th quarter 2018, based on share of visits
Leading online marketplaces in the United States 2018, by visit share
Note(s): United States; Q4 2018
Further information regarding this statistic can be found on page 8.Source(s): SimilarWeb; ID 270884
56,1%
19,7%
10,8%
4,5% 3,5% 1,8% 1,2% 0,9% 0,8% 0,8%
0%
10%
20%
30%
40%
50%
60%
Sh
are
of
ma
rke
tpla
ce s
ite
vis
its
4
Analysis of the marketShare of mobile device owners in the United States who did online shopping via an app in the past month as of December 2019
U.S. mobile users shopping activities via app 2019
Note(s): United States; December 2019; smartphone and tablet owners; in the past month
Further information regarding this statistic can be found on page 8.Source(s): eMarketer; Bizrate Insights; ID 183701
46%
40%
23%
20%
18%
3%
20%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Used a mobile retail app to look for more information about a…
Used a mobile retail app to make a purchase
Used a mobile wallet app to pay in-store (e.g. Apple Pay,…
Used a grocery app (e.g. Amazon Fresh, FreshDirect, Walmart…
Used a shared economy service (e.g. Uber, Lyft, Airbnb etc)
Used a meal kit subscription service app (e.g. Blue Apron, Hello…
None of the above
Share of respondents
Competitors
23,8
21,2
20,6
5,7
16,80
45,6
15,7
5
0 10 20 30 40 50
Etsy
Ebay
Booking
Amzon
Net Income (in % of Rev.) EBIT (in % of Rev.)
Analysis of the marketProjected global retail e-commerce sales in 2020, by region (in billion U.S. dollars)
Global e-commerce sales forecast 2020, by region
Note(s): Worldwide; 2020
Further information regarding this statistic can be found on page 8.Source(s): eMarketer; ID 311357
2 448,33
749
498,32
92,91
83,63
41,56
0 500 1 000 1 500 2 000 2 500 3 000
Asia Pacific
North America
Western Europe
Central & Eastern Europe
Latin America
Middle East & Africa
Sales in billion U.S. dollars
Analysis of the marketChange in e-commerce usage to purchase products normally bought in-store due to coronavirus (COVID-19) worldwide as of March 15, 2020, by country
E-commerce purchase frequency change due to the coronavirus outbreak 2020, by country
Note(s): Worldwide; March 12 to 14, 2020; 16-74 years; 10,000 respondents
Further information regarding this statistic can be found on page 8.Source(s): Ipsos; ID 1105597
18% 16% 16% 12%
31%18%
27%18% 23%
57% 50% 55%
38% 45% 51%
38%
44%57% 40%
49% 42%
14%19% 14%10% 7%
6%
15%
12% 5% 19%6% 12%
21% 25% 25%35% 32% 28%35%
13% 20% 14%27% 23%
9% 6% 7%
0%
20%
40%
60%
80%
100%
120%
Australia Canada France Germany Italy Japan Russia United
Kingdom
U.S. Vietnam China India
Sh
are
of
resp
on
de
nts
More frequently No change Less frequently I rarely or never do this activity
Them
Etsy has several competitors in the
online marketplace industry.
The company is ranked among the top
10 in terms of market cap but
faces giants as Amazon, eBay, Uber. As
a result, Etsy is trying to differentiate
from its competitors by “keeping the
commerce human”.
Us
Etsy wants to increase its market share
by concentrating its efforts on its core
market. And slowly makes strategic
introductions in other countries to take
advantage of growth in other markets.
In addition of that, the firm wants to
build a trusted brand, a reputation that
represents Etsy main mission and this
is what makes it different from
competitors .
News
August 2019Acquisition of the music instrument
marketplace Reverb
January 4th 2021Insider Chief Marketing Officer Ryan Scott exercices
its ITM stock options and sells its shares
October 28th 2020Etsy sees its merchandise sales grow
by 119% in Q3
January 26th 2021Elon Musk tweets that he likes Etsy: stock price increases by 8.6% to 226.5,
falls back to 193 the next day
January 30th 2021Jefferies updates its buy recommendation on Etsy with target
price at 245$
Earnings
1st Quarter 3rd Quarter
2nd Quarter 4th Quarter
03/31/2020 10/28/2020
06/30/2020 02/24/2021
Income Statement2017 2018 2019 LTM
Revenue 441,2 604 818 1 378
Other revenue
Total Revenue 441,20 100% 603,70 100% 818,40 100% 1 378,30 100%
Revenue Growth / 37% 36% 68% 47%
Cost of sales (COGS) 150 34% 191 32% 271 33% 405 29%
Gross Profit 291,00 66% 412,90 68% 547,40 67% 973,50 71%
SG&A 191 43% 241 40% 332 41% 519 38%
R&D 71 16% 89 15% 122 15% 165 12%
D&A 0% 0% 0% 0%
Other operating expense/(income) 0% 0% 0% 0%
Total OPEX 262,00 59% 329,90 55% 453,70 55% 683,10 50%
Operating Income 29,00 7% 83,00 14% 93,70 11% 290,40 21%
Interest income 2 1% 9 1% 13 2% 10 1%
Interest expenses 11 2% 22 4% 24 3% 41 3%
Other non-operating income/(loss) 12 3% -14 -2% -2 0% -24 -2%
Pretax Income 32,30 7% 55,50 9% 80,70 10% 236,20 17%
Income tax expense -50 -11% -22 -4% -15 -2% 3 0%
Profit from continuing operations 81,80 19% 77,50 13% 95,90 12% 233,00 17%
Earnings of discontinued operations 0% 0% 0% 0%
Net Income to Company 81,80 19% 77,50 13% 95,90 12% 233,00 17%
Minority interest 0% 0% 0% 0%
Net Income 81,80 19% 77,50 13% 95,90 12% 233,00 17%
Net Income Growth / -5% 24% 143% 54%
In million $
Average
Growth
Income Statement
-
500
1 000
1 500
2017 2018 2019 LTM
Revenue & Net Income Growth
Total Revenue Net Income
0%
20%
40%
60%
80%
100%
2017 2018 2019 LTM
Proportion of OPEX in Total Revenue
Total OPEX Total Revenue
Balance Sheet2017 2018 2019 LTM
-Current Assets 439,30 73% 680,30 75% 921,10 60% 1 697,90 77%
Cash & cash equivalents 315,40 52% 367,00 41% 443,30 29% 1 145,00 52%
Short term investments 25,10 4% 257,30 29% 374,00 24% 379,60 17%
Accounts receivable 33,70 6% 12,20 1% 15,40 1% 16,30 1%
Other receivable 0% 0% 0% 0%
Inventory 0% 0% 0% 0%
Prepaid expenses 20,40 3% 22,70 3% 38,60 3% 43,60 2%
Other current assets 44,70 7% 21,10 2% 49,80 3% 113,40 5%
-Long Term Assets 166,30 27% 221,60 25% 621,30 40% 516,60 23%
PPE (Gross) 135,00 22% 136,40 15% 183,10 12% 270,50 12%
Depreciation 36,20 6% 47,00 5% 63,30 4% 152,30 7%
PPE (Net) 98,80 16% 89,40 10% 119,80 8% 118,20 5%
Goodwill 38,50 6% 37,50 4% 138,70 9% 139,70 6%
Other intangible assets 22,40 4% 65,40 7% 248,60 16% 189,10 9%
Investment property 0% 0% 89,30 6% 36,70 2%
Financial assets 0% 0% 0% 0%
Other long term assets 6,60 1% 29,30 3% 24,90 2% 32,90 1%
Total Assets 605,60 901,90 1 542,40 2 214,50 Other Assets
In Million $ Other Assets
Balance Sheet2017 2018 2019 LTM
-Current Liabilities 102,50 17% 112,10 12% 188,50 12% 340,90 15%
Accounts payable 13,60 2% 26,50 3% 26,30 2% 22,10 1%
Short term debt 39,50 7% 60,60 7% 108,40 7% 193,00 9%
Cur. portion of LT debt 0% 0% 0% 0%
Other current liabilities 49,40 8% 25,00 3% 53,80 3% 125,80 6%
-Long Term Liabilities 106,20 18% 388,90 43% 947,10 61% 1 206,90 54% #
Long term provisions 0% 0% 0% 0%
Long term debt - 0% 276,50 31% 785,10 51% 1 054,60 48%
Other LT liabilities 106,20 18% 112,40 12% 162,00 11% 152,30 7%
Total Liabilities 208,70 34% 501,00 56% 1 135,60 74% 1 547,80 70%
-Shareholders' Equity 396,90 66% 400,90 44% 406,80 26% 666,70 30%
Common stock 0,10 0% 0,10 0% 0,10 0% 0,10 0%
Preferred stock 0% 0% 0% 0%
Add. paid-in capital 499,40 82% 562,00 62% 642,60 42% 886,30 40%
Treasury stock 0% 0% 0% 0%
Retained earnings (96,30) -16% (153,40) -17% (227,40) -15% (217,90) -10%
Other (6,30) -1% (7,80) -1% (8,50) -1% (1,80) 0%
Total Liab. & Equity 605,60 901,90 1 542,40 2 214,50
Liabilities and Equity
Balance Sheet
52%
1%0%
5%
6%0%
36%
Assets' Weight (LTM)
Cash & cashequivalentsAccounts receivable
Inventory
PPE (Net)
Goodwill
Financial assets
Other Assets -
500
1 000
1 500
2 000
2 500
2017 2018 2019 LTM
LT Debt & Equity
Long term debt -Shareholders' Equity
Total Liab. & Equity
Cash Flow Statement2017 2018 2019 LTM 2017 2018 2019 LTM
Net Income 81,80 77,50 95,90 233,00 ST Debt Issued
D&A 16 13 16 28 LT Debt Issued 345 650 650
Amort of Goodwil & Intangibles 3 4 10 10 ST Debt Repaid
Stock based compensation 27 38 44 61 LT Debt Repaid -14 -16 -11 -147
Other Operating Activities -73 -8 -6 52
Change in acc. Receivable -9 17 -13 -13 Issuance of Com. Stock 34 18 10 19
Change in Inventories 15 5 37 39 Repurchase of Com. Stock -17 -159 -210 -242
Change in acc. Payable 3 13 -1 -1 Com. Dividends Paid
Change in Unearned Revenue 0 1 0 0 Special Dividend Paid
Change in other Net Op. Assets 6 27 23 106 Other Financing Activities 0 -40 -82 -83
Cash From Operations 69,10 188,90 206,90 513,90 Cash From Financing 3,00 148,00 357,80 197,80
CAPEX -4 -1 -10 -2 Net Change in Cash 133,90 51,50 76,30 473,20
Cash Acquisitions -270 1
Divestitures Free Cash Flow 65,20 187,70 197,40 511,80
Invest. In Securities 75 -229 -201 -232
Net Decrease (Incr.) in loans
Other Investing Activities -9 -55 -8 -5
Cash From Investing 61,80 (285,40) (488,40) (238,50)
In Million $
Ratios2017 2018 2019 LTM Information
Net income 233,00
Total Revenue 441,20 603,70 818,40 1 378,30 Stock price 203,77
COGS 150 191 271 405 Dividends per share
SG&A 191 241 332 519 Dividend (%) 0,00%
R&D 71 89 122 165
D&A 16 13 16 28 Preferred dividends
Other Op. Expenses 0 0 0 0 Weighted average 119,35
EBITDA 45 96 110 319 Total Capital 2019 1 914,30$
EBITDA in % of Rev. 10,11% 15,89% 13,39% 23,12% Total Capital 2018 1 300,30$
EBIT 29 83 94 290
EBIT in % of Rev. 6,57% 13,75% 11,45% 21,07%
In Million $
Margin Ratios TTM 4YA Industry
Gross profit margin 70,63% 67,97% 42,51%
Operating profit margin 21,07% 13,21% 9,41%
Net profit margin 16,90% 15,00% 19,18%
Profitability Ratios TTM Industry EBAY
ROA 12,40% 7,16% 10,20%
ROCE 15,50% 9,71% 81,00%
ROE 43,41% 15,72% 81,00%
Market Valuation Ratios TTM Industry EBAY
EPS 1,95 1,90 7,27
P/E 104,38 201,00 15,50
Liquidity Ratios 2017 2018 2019 LTM Trend
Current ratio 4,29 6,07 4,89 4,98
Quick ratio 3,65 5,68 4,42 4,52
Cash ratio 3,32 5,57 4,34 4,47
Solvency Ratios 2017 2018 2019 LTM Trend
LT Debt to Equity 0% 69% 193% 158%
Debt to Equity 10% 84% 220% 187%
Debt to Capital 9% 46% 69% 65%
Debt to Assets 7% 37% 58% 56%
Debt to EBITDA 89% 352% 815% 392%
Ratios
0%
20%
40%
60%
80%
Gross profitmargin
Operating profitmargin
Net profit margin
Margin Ratios : TTM vs 4YA vs Industry
TTM 4YA Industry
0%
5%
10%
15%
20%
25%
0
100
200
300
400
2017 2018 2019 LTM
EBITDA & EBITDA Margin
EBITDA EBITDA in % of Rev.
1,95
104,38
1,90
201,00
7,27
15,50
- 50,00 100,00 150,00 200,00 250,00
EPS
P/E
Market Valuation Ratios
EBAY Industry TTM
0%
20%
40%
60%
80%
100%
ROA ROCE ROE
Profitability Ratios
TTM Industry EBAY
Enterprise valuation
EV/EBITDA
P/E ratio
0,9 1,43
8,5
15,8
28,21
34,8
42,8
31,126,7
2016 2017 2018 2019 2020
Market cap (in B $)
EBAY
ETSY
79,5
ETSY
19,63
Industry
ETSY 104 93.8 AMZN
Booking 68 32 Ebay
Opportunities
• Decelerating growth of e-commerce
as consumer demand moves toward
experiences after covid
• Pandemic accelerated shift
toward internet shopping
Risks
• Highly differentiated products:
unique handcrafted items you
can't find anywhere else
• Huge potential: market for such
goods is estimated at more than
$100Bn (Etsy's current
merchandise sales represent a
7% market share)
• Competitive environment (Shopify,
Amazon Handmade...)
• Strong increase in stock price in
2020 : high valuation